In the wake of the U.S. Supreme Court decision in Mayo Collaborative Services v. Prometheus Labs (see IP Update, Vol. 14, No. 6.) the struggle continues for the proper analysis to determine patent-eligible subject matter if a patent claim is directed to a non-patent-eligible “abstract idea.” In a post-Prometheus case, after eliminating the non-integral limitations regarding computer use, the U.S. Court of Appeals for the Federal Circuit determined that Bancorp’s method, system and medium claims regarding the administration and tracking of the value of life insurance policies in separate accounts contained the equivalent non-patentable abstract “inventive concept” and affirmed the district court’s holding of invalidity under 35 U.S.C. § 101. Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), Case No. 11-1467 (Fed. Cir., July 26, 2012) (Lourie, J.).

Initial Claim Construction

Before proceeding with its § 101 analysis, the Federal Circuit concluded that Bancorp’s system and media claims required particular computer devices or computer-readable media, as conceded by the parties. However, the Court applied the doctrine of claim differentiation to construe the independent method claims as not requiring implementation on a computer since the computer-use limitations were found only in the dependent claims.

Computer-Based Limitations to Abstract Ideas

In analyzing whether Bancorp’s method claims were merely patent-ineligible abstract ideas, the Court noted that the limitation “using a computer” in an otherwise abstract concept must “play a significant part in permitting the claimed method to be performed.” Under that premise, the Court recognized that it was the management of the life insurance policy that was integral to each of Bancorp’s claims at issue, not the computer machinery that may be used to accomplish it, and concluded that there was no material difference between Bancorp’s claims and the claims invalidated in Bilski. (See IP Update, Vol. 11, No. 11.) Setting aside the computer-based limitations, the Court stated that the only features remaining are claims for performing calculations and manipulating values—matters of mere mathematical computation.

Is the Name of the Game Still the Claim?

Even though the system and medium claims contained tangible objects and are non-abstract per se, the Court determined that the “inventive concept” was equivalent with the abstract method claims and, therefore, did not change the patent eligibility analysis under § 101. The Court cited Cybersource (IP Update, Vol. 14, No. 9) and CLS for the proposition that a machine, system, medium or the like may in some cases be equivalent to an abstract mental process for purposes of patent ineligibility. However, in CLS (see IP Update, Vol. 15, No. 7), the majority specifically rejected this type of analysis stating that “[p]atent eligibility must be evaluated based on what the claims recite, not merely on the ideas upon which they are premised.”

In CLS, a divided panel concluded that a group of patents directed to a computerized trading platform for exchanging obligations so as to eliminate “settlement risk,” defined patent-eligible subject matter under § 101. The CLS majority criticized the “inventive concept” approach cited in the dissent by Judge Prost (a member of the Bancorp panel) and explained that “ignoring claim limitations in order to abstract a process down to a fundamental truth is legally impermissible.” They noted that the Supreme Court’s reference to an “inventive concept” in Prometheus could not be read to endorse overlooking the actual terms of the claims or the distillation of claim language to mere generalities. The CLS majority concluded “that when after taking all of the claim recitations into consideration it is not manifestly evident that the claim is directed to a patent ineligible abstract idea, that claim must not be deemed for that reason to be inadequate under § 101.”

Arriving at a contrary result, the panel in Bancorp explained that its decision is not inconsistent with CLS for multiple reasons. First, the district court in Bancorp evaluated the limitations of the claims as a whole before arriving at invalidity. Second, unlike CLS where the majority was unable to conclude that the computer limitations did not play a significant part in the performance of the invention, the panel in Bancorp affirmatively concluded that the computer limitations did not play a “significant part.” Finally, Bancorp sought to broadly claim the concept of managing a stable value protected life insurance policy where CLS’s claims were restricted to a “very specific application” of their concept.

Practice Note: There is a clear split among panels of the Federal Circuit regarding the correct approach to determining patent eligibility under § 101. In order to survive under either a CLS or Bancorp analysis, practitioners must be able to identify how the use of a computer plays a “significant part” in the implementation of a claimed business method and most sufficiently recite that implementation in the claims.